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AbstractWe present evidence of the minimum wage effects on labour informality rates in Colombia, where the informality is by far the most serious problem of the labour market. The working population is divided into sixteen groups depending on the age, gender, and educational level. This division…

The results show  considerable heterogeneity in the adoption and use of payment methods and reveal that mobile wallets broaden the range of options available to users. 

An unexpected increase in the monetary policy rate generates a “Jcurve” pattern in the trade balance: in the short run, exports fall more than imports (the trade balance deteriorates), and in the medium term, imports fall more than exports (the trade balance improves). 

Regarding the impact of monetary policy on housing prices, we find that it is significant: a one-unit monetary policy surprise shock (in the index) leads to a decline in housing price growth of approximately 6 percentage points as supply elasticity decreases.

Although there is a close relationship between the government’s budget and its fiscal balance, they respond to different objectives, concepts, accounting bases, and measurement methodologies, which makes their understanding, monitoring, and evaluation more difficult. 

The results show a significant increase in formal employment among eligible firms, ranging from 11 to 18 percentage points compared to non-beneficiaries. This impact persisted for up to two years after the program ended. 

Hospital productivity has declined steadily across all three complexity levels. Level 3 public hospitals (ESEs) were more resilient during the pandemic, while Level 2 hospitals suffered the greatest impact but showed a stronger recovery. Level 1 hospitals experienced the most prolonged decline with…

Economic news contains qualitative and forward-looking information that traditional data cannot capture. The sentiment and uncertainty indices synthesize this information and translate it into useful signals to enhance the analysis of short-term dynamics and turning points in economic activity. 

Neighborhoods that initially had high crime rates, and that were connected to the cable cars experience a significant decrease in the likelihood that their residents engage in criminal activities, and this change is proportional to the reductions in travel time provided by the new infrastructure. 

The implicit equity tax is progressive for smaller firms but regressive for larger ones.

In the Colombian labor market, possessing a broad and diverse set of skills and knowledge—beyond basic requirements for each occupation—can make a significant difference in wage determination. 

ApproachThis study updates the 4GM model used by Banco de la República (the Central Bank of Colombia) for monetary policy analysis. The update explicitly incorporates labor‑market dynamics, including the evolution of the unemployment rate and wages. The aim is to capture how labor‑market conditions…

AbstractWe study the financial and real effects of a wealth tax reform in Colombia that included a large share of small and medium-sized enterprises (SMEs) as new taxpayers. The tax was introduced in response to a severe weather shock that affected several regions of the country. We use a unique…

Demographic change represents not only a challenge but also an opportunity to rethink the financing structure and target investment toward key areas such as expanding early‑childhood and upper‑secondary education coverage, enhancing equity, strengthening teacher training, improving the student‑…

Since: 1994

This paper identifies Okun´s law in Colombia between 1984 and 2016 using a Vector Error Correction Model (VECM) as there is evidence of a long-term relationship between the unemployment rate and the GDP. Results suggest that after a one percent increase in GDP, the unemployment rate is reduced by 0…

The analysis shows how the demand for cash and checks from 1923 to 2023 was shaped by economic activity, inflation dynamics, the development of the financial system, technological innovation, and significant historical shocks such as wars, political instability, or the Covid-19 pandemic.

This paper presents a methodology to estimate the intraday liquidity that systemically important entities (SIE) need to fulfill all its obligations in a timely fashion, when a simulated failure-to-pay from its main liquidity supplier by discretionary concepts of payment occurs. Using the Bank of…

AbstractIn this paper, we study the coexistence of cash and electronic payments introducing some distortions in the payments markets to understand the widespread use of cash, specially in emerging countries. Following Lagos and Wright (2005) we model explicitly some frictions in the…

We study the network of Colombian sovereign securities settlements. With data from the settlement market infrastructure we study financial institutions’ transactions from three different trading and registering individual networks that we combine into a multi-layer network.

AbstractCash is still widely used in Colombia, even among merchants that accept payment cards. Indeed, 60% of these merchants use dissuasive strategies to make their clients pay with cash. This shows that merchant service costs (MSC) for cards are not optimal in the sense of the Tourist Test. We…

The financial soundness of Central Banks (CBs) may be a necessary condition for achieving their objectives. Banco de la República (the Central Bank of Colombia) has a legal framework that grants it administrative, equity, and technical autonomy, as well as mechanisms that help preserve its capital…

In this paper we analyze the effects of financial constraints on the exchange rate through the portfolio balance channel. Our contribution is twofold: First, we construct a tractable two-period general equilibrium model in which financial constraints inhibit capital flows. Hence, departures from…

In the present paper we remark that the absence of an intrinsic or fundamental value represents a problem for the stability of the bitcoin’s price as an asset. In addition, we consider some financial stability concerns that derive from the hypothesis that the bitcoin will survive as an asset…

Despite various payment innovations, today, cash is still heavily used to pay for low-value purchases. This paper develops a simulation model to test whether standard implications of the theory on cash management and payment choices can explain the use of payment instruments by transaction size. In…